"The latest research from MRI Software reveals a significant shift in renter behaviour, with affordability and financial pressures pushing the aspiration for home ownership further out of reach for many"
- Dan Foryszewski - MRI Software
UK renters prefer city living and sustainable amenities, but financial barriers to homeownership remain, according to MRI Software.
The firm's 2024 Rental Housing Trends Report found that a staggering 80% of renters now feel priced out of the housing market, with 33% completely abandoning homeownership. Affordability remains the primary obstacle, particularly among those over 55, indicating a shift towards long-term renting across age groups.
Affordability
With a new government in power, affordability and a lack of housing options remain primary concerns about the UK rental market. Surveying over 3,000 residential renters across the UK, the report revealed significant behavioural shifts and emerging trends in the private rental market as the UK adapts to post-COVID normality and tackles the ongoing cost-of-living crisis.
Key themes include the rising financial challenges faced by younger renters, with 48% of 18–24-year-olds surveyed continuing to live with their parents or housemates. This highlights the financial hurdles facing this demographic with rising rental costs, lack of savings, and economic uncertainties all crucial contributors.
North/South divide
The North-South divide was also prevalent, with 32% stating their rent payments were between £400-600 per month; however, these respondents were predominantly based in northern parts of the UK. Rent payments in the South averaged £1,000-1,500 per month.
The economic landscape shifts significantly as we move towards the South as more major business hubs operate in these areas and the supply of properties is limited. Fierce competition within the rental market naturally drives up prices and the desire to live closer to amenities that provide cultural, educational and economic benefits.
The pandemic may have influenced these trends, prompting many to reassess living arrangements. Some likely chose to relocate to the North to get more space for their money yet still keep remote jobs in the South. This trend may have led to a slight increase in rents in certain parts of the North but overall, the North/South rental price gap still remains vast.
Interestingly, it appears the idyllic dream for rural surroundings is starting to wane post-pandemic as priorities shift. The preference for city living has surged, with a notable increase in younger renters opting for urban apartments over rural houses.
This reveals how different generations value the closeness to daily amenities, office locations, career opportunities, and social activities differently, with younger individuals more inclined to embrace city life. This may also become more noticeable as more and more businesses enforce a return to the office from September in the UK. For landlords and property developers, these insights provide an opportunity to continue investing in build to rent developments while demand exists and grows.
With sustainability high on the agenda for all sectors, it appears that younger renters are placing high importance on these credentials especially where cost efficiencies can be achieved. To ensure appropriate energy solutions are being implemented, it’s essential for landlords and property managers to have an oversight of how energy is currently being used within the properties they manage.
The report also highlights a growing opportunity for landlords to enhance tenant experiences through digital platforms. 60% of renters prefer self-managed digital communications when dealing with their landlord.
However, the uptake of resident portals is extremely low when compared with telephone and email communications. By developing effective digital tenancy processes and data-driven energy efficiency strategies, the industry can support renters to navigate the cost-of-living crisis whilst capturing their own operational efficiencies, not to mention developing competitive advantages that will serve them for years to come.
Dan Foryszewski, Director for Residential Investor Solutions at MRI Software, said: "The latest research from MRI Software reveals a significant shift in renter behaviour, with affordability and financial pressures pushing the aspiration for home ownership further out of reach for many.
"Today, 80% of renters feel priced out and a growing number choosing to rent long-term which is why the need for affordable housing solutions has never been more important.”
